Nigeria’s economy has recorded modest gains in the first half of 2025, but the big challenge remains how to translate these macro outcomes into real improvements in the lives of its citizens.
According to the Staying the Course on Reforms report by the Nigerian Economic Summit Group (NESG), reforms such as fuel subsidy removal and exchange rate liberalisation have stabilised key indicators but also imposed steep short-term costs on households and businesses.
Nigeria’s Gross Domestic Product data show the economy expanded by 3.1 percent in Q1 2025, with the non-oil sector as the main driver.
In the first half of the year, inflation eased after the rebasing of the Consumer Price Index but remained high at 23.5 percent, while food inflation was reported at 22.6 percent. The fiscal picture remains fragile: government revenue underperformed, public debt climbed to N149.4 trillion, and debt servicing consumed more than 100 percent of revenues in Q1.
On the external side, reserves rose to $37.2 billion in H1, though declining from January’s $40.9 billion peak. Non-oil exports surged by 177 percent year-on-year, but foreign capital inflows were dominated by volatile portfolio investments, raising concerns of sudden reversals.
“The reforms, while potentially beneficial macroeconomically, are deepening existing socio-economic inequalities and pushing more people into poverty,” NESG warned.
NESG, in its outlook report, projects Nigeria’s real GDP growth to average 4.0 percent in the second half of 2025, bringing full-year growth to 3.8 percent, an improvement, though still below the economy’s potential. Inflation is expected to average 24.5 percent in H2.
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“This growth will be led by the services sector, while agriculture and industry face constraints from insecurity, flooding, and high input costs,” the report said.
It also disclosed that oil production is projected at 1.7 million barrels per day, below budget targets but slightly improved from 2024 levels.
Despite these improvements, NESG warns that the benefits of reform “will not be sufficient to drive meaningful increases in per capita income or generate broad-based employment opportunities in 2025” unless reforms are complemented by deliberate strategies to foster inclusion.
According to the Economic Summit Group, here are strategies Nigeria can implement to turn its economic gains into social impacts.
Expand Social Protection
NESG urges the government to urgently scale up direct household support through cash transfers, food assistance, and health subsidies. Currently, only 37 percent of targeted households benefit from the National Cash Transfer Programme.
“Direct cash transfers are a proven, effective mechanism for providing immediate relief, alleviating poverty, and improving household consumption,” the report noted, stressing the need for timely disbursement and transparency to build public trust.
Support MSMEs and Business Growth
Micro, small, and medium enterprises, which employ most Nigerians, have been affected by high costs and restricted credit. NESG called for a stable exchange rate regime, clearance of FX backlogs, and predictable access for legitimate businesses.
It recommended that the National Credit Guarantee Company be “fully operationalised with substantial guaranteed coverage to incentivise banks and fintechs to lend more boldly to underserved MSMEs.”
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Beyond credit, NESG emphasised fixing power and transport infrastructure to lower business costs and streamlining regulatory frameworks to reduce compliance burdens.
Drive Productivity and Job Creation
With nearly 90 percent of Nigeria’s workforce in the informal sector, formalisation is critical. NESG urged the government to simplify registration, expand social protection to informal workers, and leverage digital ID systems to widen the tax base.
“A thriving private sector primarily drives sustainable and inclusive job creation,” the report stressed, adding that robust labour market policies, targeted training, and investment in priority sectors like agriculture, mining, and manufacturing are needed to absorb Nigeria’s fast-growing youth population.
